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Windows 'phone' isn't dead Part I: Keeping the vision in view

Each OS reboot came with the promise of "this is it". We've gone from Windows Mobile's abrupt end to Windows Phone 7's late beginning as a modern smartphone platform. We encountered another stop at Windows Phone 7.8 as Windows Phone 8 picked up the reigns. Windows 10 Mobile has now arrived, albeit in what many have assessed to be in a premature state not adequately prepared for life outside of Redmond's womb.

The operating system story is only part of the evolving tale. Distribution strategies, partnerships, marketing, hardware development, corporate reorgs and more all play a role in how Microsoft's mobile efforts were birthed, matured and regressed only to be reborn. All of these strategic executions have been to reposition Microsoft's mobile efforts for a more successful rebirth and life in the industry.

In 2016, we are watching a Microsoft mobile strategy that is gestating in a very vulnerable state, while in its retrenched position. This period is a very critical time in Microsoft's history and the company's CEO, Satya Nadella's, long-term vision. To understand the crucial nature of Microsoft's current position, we must understand both how Nadella's vision has brought the firm to this point and where it is intended to take the company next.

The question is, how do we as Microsoft and industry watchers "know" where Microsoft is in their mobile strategy? Well, we don't have a complete view of Microsoft's strategy at all. But as an ultrasound tech learns to distinguish the vital parts of a developing child from distracting blurs populating the view, diligent observation, keen perception and most of all, a persistent eye on the big picture are critical.

Eyes on the big picture

Watching and analyzing Microsoft's dynamic mobile strategy is very much like playing the timeless Shell Game. In that game, a quick-handed gentleman hides a small object beneath one of three cups. After a dizzying repositioning of those cups, the "player" is asked which cup contains the object. In more cases than not the wrong cup is chosen. An astute eye, often with the support of others is often required to keep the object in view.

What may come as a surprise to some is that Microsoft's retrenched status and consequent gestating state isn't news now, nor was it news when it was "news". Confusing I know; allow me to explain. Microsoft's current strategic positioning was not a sudden shift in strategy in response to the industry's state at the time. Microsoft's CEO Satya Nadella diagnosed the ailing health of Microsoft's mobile platform over two years ago.

To ensure the platforms survival and long-term vitality, on July 10, 2014, in a memo titled Bold Ambitions and Our Core{.nofollow}, Nadella issued his prescription for Microsoft's mobile division which outlined his short-term goals and long-term vision for the platform. He telegraphed big changes, short-term objectives, that would not begin to manifest until the following year (2015). When they occurred, the industry took notice.

The Nokia write-down, the end of the low-end Lumia push and a move to first-party hardware as aspirational devices akin to how Microsoft executes the Surface model, caught the attention of the industry during the summer of 2015. Apparently Windows Phone died then too. In a 3-part series "Perfect Windows 10"that I wrote in August of 2015, I presented an analysis of Microsoft's mobile strategy that addressed the industries dramatic response to the shifts we saw as Microsoft executed against its long-term vision.

Summer to remember

During June and July of last year many industry watchers viewed statements made by Nadella in emails he sent on June 25th – "Aligning our strategy and structure" and July 8th 2015 – "Sharpening Our Business Focus (opens in new tab), an interview on July 14, 2015 with Mary Jo Foley and an earnings call on July 21, 2015 (opens in new tab) as reactive shifts in Microsoft's mobile strategy. This apparent change in strategy was presumed to be due to Windows Phones poor performance as seen in the Q2 2015 SEC filings.

I contended, however, Nadella's focus on a smaller market, departure from manufacturing a deluge of phones and positioning first-party hardware as aspirational devices was his revisiting what he stated as his long-term vision in July of 2014. What appeared to be responsive shifts in strategy were clearly outlined by Nadella in his July 10, 2014, memo as short-term objectives of his long-term vision. It's critical that we keep our eyes on the larger vision so that during each phase of the long-term strategy we'll have a better chance of understanding what Microsoft is doing and what the company may execute next.

Following is a snapshot of my previous analysis. This snapshot highlights the steps in Nadella's vision which led us to what is now, in 2016, a positioning of Windows "phone" in a state of "gestation" preparing for yet another shot at life in the broader market.

How we got here

Perfect (Windows) 10 Part I: The Nokia Write-down was on the wall

In his July 10, 2014 memo{.nofollow} Nadella foreshadowed the imminent Nokia write-down with a decisive statement that nothing is off the table concerning readjusting Redmond's priorities and simplifying processes.

"Nothing is off the table in how we think about shifting our culture to deliver on this core strategy. Our priorities will be adjusted. New skills will be built. New ideas will be heard. New hires will be made. Processes will be simplified"

Almost a year later in his 6/25/15 email Nadella makes clear that Microsoft will execute against its plans and make tough choices.

"We will need to innovate in new areas, execute against our plans, make some tough choices in areas where things are not working and solve hard problems in ways that drive customer value."

Finally in his July 8th, 2015 memo (opens in new tab) Nadella makes a definitive announcement of the Nokia write-down.

"..the company will take an impairment charge of approximately $7.6 billion related to assets associated with the acquisition of the Nokia Devices and Services business…"

Many industry watchers who viewed the last two memos independent of the first interpreted the write-down as a sudden shift in strategy.

Perfect (Windows) 10 Part II: Value Phones

In his 7/10/2014 memo Nadella{.nofollow} stressed that the low-end push was a near-term strategy. This of course indicated a short-term strategy with a determined end.

"We will be particularly focused on making the market for Windows Phone. In the near term, we plan to drive Windows Phone volume by targeting the more affordable smartphone segments, which are the fastest growing segments of the market, with Lumia.… Microsoft will push into all corners of the globe to empower every individual as a dual user."

In his July 8th, 2015 (opens in new tab) memo Nadella announced the cessation of the companies market deluge and the planned move to a more refined market approach.

"We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem that includes our first-party device family.

On a 7/21/15 earnings call, Nadella reiterated the end of the low-end push."

"We want to be smart about how many of these phones do we want to generate?...That's where you will see the most significant operational changes from how we operated last year to the coming year."

Nadella was clear in his July 10, 2014, memo that the low-end push was a near-term, thus short-term strategy with a definitive end leading to the current stage of building the ecosystem. Viewing the July 8th and July 21st, 2015 statements independent of the 2014 statement led many to believe Nadella was shifting strategies mid-year.

Perfect (Windows) 10 Part III: Flagships

In his July 10th, 2014 memo Nadella states that the company's first-party hardware will follow the example set by the Surface model.

"Our first-party devices will light up digital work and life. Surface Pro 3 is a great example – it is the world's best productivity tablet. In addition, we will build first-party hardware to stimulate more demand for the entire Windows ecosystem."

In a July 14, 2015 interview with Mary Jo Foley Nadella affirms that first-party phones will follow the Surface model.

Mary Jo Foley: "Now what we're doing with phone is more like what you're doing with Surface. Your phones are going to be more of like showcase devices for what Windows Mobile can look like on a phone."Satya: "Correct"

Viewing Nadella's July 14, 2015 affirmation independent of the July 2014 communication caused many to miss the big picture. The industry at large reacted to the "restatement" that first-party phones would follow the Surface model as if it was new information rather than the execution of a short-term goal of a long-term vision shared a year earlier.

These events have led us to the present and to the many misconceptions regarding Microsoft's current position in mobile. Windows phone is not dead. Recent decreases in Windows phones sales and lower sales to come are not indicative of the platforms death. They are simply empirical data reflective of the platforms retrenched position.

Where is Microsoft's mobile strategy today and what's next?

Microsoft's current state in the mobile space is a short-term position of "re-development." As a child gestates in a womb, Microsoft's mobile position is shielded from the general smartphone market while vital components of the ecosystem are being positioned to feed into the platforms ultimate success.

For the next nine months or so, as we anticipate the birth of a first-party flagship that will demonstrate a more mature Windows 10 Mobile OS on custom first-party high-end hardware, Microsoft's long-term vision currently has the firm steadily working on critical aspects of the ecosystem. OEM partnerships, the app bridges, consistent updates to Windows 10/Mobile, interaction with users on social media, responding to feedback from Insiders and more are all critical to Microsoft's current position before their re-entry into the general consumer space.

Microsoft's long-term vision currently has the firm steadily working on critical aspects of the ecosystem.

According to Microsoft CMO, Chris Caposella, this current retrenching from the general market, which began last summer, is only supposed to last two years. That positions the company for a potential introduction of a consumer focused flagship "phone" in Q4 of 2017. This timetable provides time for OEM partnerships and development of the app bridges to flourish. A high-end consumer device released in 2017 will ideally benefit from a much richer app catalogue than we see today. As we know, a vibrant app ecosystem is critical for success in the consumer space.

Additionally, the anticipated Surface "Phone," is expected to be released in Q4 of this year. This device, if launched will benefit from a more mature Windows 10 Mobile OS and likely feature a unique hardware capability consistent with the theme of the Surface line. That unique hardware design, akin to Surface-inspired detachable 2-in-1s, will be positioned by Microsoft to inspire their OEM partners.

Lumia 950 and Surface

Lumia 950 and Surface (Image credit: Windows Central)

Consequently, over the course of 2017, we will likely begin to see manufacturers emulating the Surface "Phone" with their own branded devices. An introduction of "Surface Phone-like" devices will support Microsoft's efforts to communicate its ethos of context-conforming devices, already heralded by 2-in-1s, to the market.

HP's business-focused Elite X3 is a beaming example of the type of versatile, powerful and most importantly, inspiring, Windows 10 "phone" Microsoft's OEM partnerships can produce.

Over the course of 2017, we will likely begin to see manufacturers emulating the Surface "Phone"

When Microsoft presumably reenters the consumer space in Q4 2017, their strategy allows for an industry potentially more welcoming to the platform. The firm will also be re-entering the consumer space with a device consistent with their vision of personal computing, and that fits within the paradigm that they are working to establish during this stage of nurturing its ecosystem while retrenched. This is a vision where the idea of a smartphone will have shifted to what will likely be a hybrid context-conforming device. Additionally, this "phone" will fit seamlessly in the Windows 10 family of devices. For context, if Microsoft reaches its goal, Windows 10 will be on 1 billion devices by 2017.

Microsoft's mobile offensive is about transforming the game

By that time, the Windows 10 experience with the Live Tile enhanced Start Menu will have been at work familiarizing hundreds of millions of PC, laptop and 2-in-1 users with the Windows Phone home screen. If Microsoft's strategy goes as I surmise, a Q4 2017 consumer-focused, first-party flagship will benefit from a rich app ecosystem courtesy of the app bridges as well as a market more acclimated to Windows Phone due to OEM partnerships. Users will also be more familiar with the Live Tile environment, and the industry will likely have a stronger embrace of Microsoft's ethos of context-conforming hardware courtesy of 2-in-1s, the anticipated Surface phone and Surface-phone-like devices.

Wrap up

I concede that my view of Microsoft's strategy may be affected by various factors and may not play out as described. But one thing is sure. Microsoft's long-term vision has always and still does include Windows "phone". As one must keep their eyes on the rapid repositioning of the cups in the Shell Game, we as industry watchers must keep our eyes on the big picture. Distractions will arise; but if we keep the big picture in view, we won't, as is quite easy to do, lose sight of the vision.

Stay tuned to parts two through five as we delve deeper into specific aspects of Microsoft's retrenched - gestating - position.

Part II - Windows 'phone' isn't dead: Nurturing the ecosystem

Jason L Ward is a columnist at Windows Central. He provides unique big picture analysis of the complex world of Microsoft. Jason takes the small clues and gives you an insightful big picture perspective through storytelling that you won't find *anywhere* else. Seriously, this dude thinks outside the box. Follow him on Twitter at @JLTechWord. He's doing the "write" thing!

232 Comments
  • Thanks again for reading folks. On a side note I hope you guys who are reading this in our new app are enjoying it. Cool stuff huh? :-) Just as our app took some type develop to fit with the new Windows Universal Platform, there are many factors in motion now on a broad scope working to bring Microsoft's mobile strategy into its place in the UWP. In the next four parts of this series we look at different aspects of the ecosystem that are working to ideally position Windows "phone" for success under the new UWP paradigm.
  • I am reading it on the app! Works great on my PC and Phone.
  • I love the actionable notifications
  • Me too. Now i can comment when i get notification saying i got a reply from..... So and so. The app is cool but still a beta.
  • I still don't receive the notifications Posted from Windows Central for Windows 10
  • You might have turned them off. Or try reinstalling Posted from Windows Central for Windows 10
  • Who is reading this on the Windows Central app?
  • Pretty much everyone?
  • I love how WPCentral team can go back in time to comment on these articles ;D On a serious note, this is a good article. I am still hanging to my Lumia 1520 for now.
  • Like the new app , still buggy on my 930, needs font size control.
    As for the OS, I hope it's not dead the HP phone looks great and hoping the surface phone stacks up. MS need to start get the basics right in the OS though now (I.e you can't group text).
  • as I had stated in earlier articles, what Microsoft should is create subsets of the Lumia brand.
    > Entry-level phones will be Lumia E phones
    > Business phones will be Lumia M (or some other letter)
    > Premium phones will be Lumia X This will be a better way to sell phones than going about the Nokia way of 950,950XL,550,650,etc.
  • App is a bit laggy on my 1520 and the text size of the articles is ridiculously big. Hope the text thing will get an update asap. Already posted an idea to daniel on twitter ;)
  • Also I am missing the option to change or edit my posts. ...
  • That is because you only get to say what you want to say once, so choose wisely! Posted from Windows Central for Windows 10
  • The new app is not so stable on my Fierce XL, crashing more often than not. When it does run I like the experience. Article was cool nonetheless.
  • Yeah, the app is still buggy and crash from time to time, but worry not, I believe it's gonna get fixed, better and faster.
  • Crashes for everyone not just your phone.
  • I'm reading this article on the new WC W10 app it's much cooler then the WP8.1 version but still needs some bug fixes
  • "much cooler THAN". Not " THEN". Those two words are not interchangeable. Posted via the Windows Central App for Android
  • The app got an update recently? Posted from Windows Central for Windows 10
  • No, windows central rela new app for Windows 10. It's a universal app. Still in beta, but works quite nicely nonetheless. :)
  • No I am using the beta app, and it got an update like last night, version 1.1.10.0 or something, changed some settings and fixed some bugs. Very nice. Posted from Windows Central for Windows 10
  • This is a great article. It gives me a little more faith in the platform, even though I plan to stick with it anyway.
  • Great thoughts, Greetings from Portugal
  • I totally understand the time needed to get this Win10 going. However, MS need to grab the bull by horn, and really go at it at 500MPH+ speed ahead. Although I'm extremely enjoying and LOVE my Lumia 950XL, and have just about Apps i can use, there are those who are BoooHoooing and whining, and Crying,......................about the App Gap and they can't live without their Garbage Snap Chat,........so re going to Android or iOS. Even Mr. Ballmer said, he doesn't see why MS is not porting all the Apps from Android or iOS over to Windows 10 NOW. I think MS doing way too much LaLA gagging when it comes to Mobile/Apps. People don't want to wait, and that's why the market share went even lower that last quarter. Also, MS needs to get OPPO, SONY, LG, SAMSUNG, ASUS, LENOVO, SHARP, DELL, SURFACE.................on board of its Windows 10 phns ASAP, and do whatever it takes to have them make Windows 10 phns ASAP. Once that is done, they need to work hard on the "Paid-Off" by Apple, carriers to have these Windows 10 phns in every store (like iJUNK devices) ASAP, when people walk in. People want choices, and will be happy to go to Win10 phns, if they had lots of selections, like its is with Android. Time is NOW(actually was yesterday, if you know what i mean), when it comes to Mobile. Fix App Gap, prob will be solved.
  • Believe believe!!!
  • Looking at that new HP phone gave me a lot of faith... If only Samsung, LG, HTC, and Sony would do the same... That's all we need, and hopefully we could get more apps if market share picked up...
  • At least we should have the option of a w10 mobile ROM like on the xiaomi mi4
  • and Xiaomi Mi5 (hopefully)
  • I think that won't make a big dent in the market. But it can increase the devices with windows 10 installed in phones, only if android guys want to move to windows just by installing windows 10 to their android handys.
  • It would take a long time for MS to make a dent in the market.... They should set their ultimate goal at 10% market share...
    .....
    I don't care what people say about MS not trying to compete against iDroid for market share.. They have to have goals, and some expectation to gain market share.. That alone is going up against the iPhone, and all Android devices... Then there's apps.. W10M still is a market share driven platform. What product isn't?
  • Yep, more phones like that and people can't ignore windows phones.
  • Sure they can
  • Their vision is irrelevant as long as their execution has been crap since WP8.1. Last summer I thought that maybe they'd finish W10M (and by finish I mean functional) by late 2015 and maybe, maybe we would have had a proper facebook/messenger/snapchat apps, but those dreams are long gone. As for the OS itself, judging the pace of development of the last 8 months, they'll have W10M ready to go by 2017.
  • I agree. While windows phone 8 actually was great and 8.1 tbh was damn neat as well
  • Windows 10 mobile has been one big let down.
  • Do you even know what you're saying?
  • Please explain the problems on the latest build released 2 days ago, maybe we can help you fix them...
  • For one continuum touch in wireless mode is completely broken
  • Please go on, if this is the kind of problems I guess we are fine ;)
  • Really I need some of those rose tinted specs. Trust me I want MS to do well. But the more I see the less I believe. Every build goes one step forward 2 steps backward. Now on the new build I get my phone scrolling slow all over and need a soft reset. But at least I am used to soft resets as mention continuum touch mouse is now broken. Worked before. I haven't see my wifi stop working and require a reboot so perhaps that is fixed although no mention of it.
  • They don't want them fixed! What would they have to moan about! All these armchair programmers....
  • I dont know when it happened, but somewhere in the last few builds, bluetooth in the car and with my Band broke again on my 950.
  • Well, not released to all phones is a let down. While I like W10M in general, Mobile Hotspot continues to be broken. And today I notice .107 has a habit of turning on WiFi.
  • Yes. Actions speak louder than words. There is certainly potential, but as someone who has used Windows phones since 2003 even I find myself considering the jump to Android despite my hatred for Google. That's how bad it has gotten. Just yesterday I clicked Shut Down on my Win10 computer. It said "Shutting Down" and had the circle of dots only to present me again with my desktop after a couple of minutes. The Microsoft of today can't even get shutting down right.